Kodak To Buy Heidelberg's Digital Business
After months of speculation, Eastman Kodak has agreed to acquire Heidelberg's digital division. This follows Heidelberg's November announcement that it would stop manufacturing digital printers as part of its realignment.
"From now on, Heidelberg will strengthen its focus on the sheetfed offset business," says Bernhard Schreier, CEO of Heidelberger Druckmaschinen AG.
Kodak will purchase Heidelberg's 50 percent interest in NexPress Solutions L.L.C., a joint venture of the two, and the equity of Heidelberg Digital L.L.C., which made digital black-and-white printing systems. Heidelberg and Kodak created Nexpress Solutions in 1997 to develop a digital color printing press. Heidelberg acquired Kodak's black-and-white digital printing activities in 1999.
The new acquisition follows Kodak's recent purchase of Scitex Digital Printing (now Kodak Versamark), a maker of high-speed ink-jet equipment, and advances its move into the digital commercial printing industry.
"Kodak is rapidly assembling the components to become an industry leader in digital commercial printing," says Daniel A. Carp, Kodak's chairman and CEO.
"We will continue our R&D investment to extend the leadership position of the NexPress 2100 and expand our product offerings," adds James Langley, president of Commercial Printing for Kodak and its senior vice president.
As part of the deal, Heidelberg has agreed not to engage in competitive activities related to its digital division within the next two years. The companies will use a performance-based earn-out formula requiring Kodak to make periodic payments to Heidelberg over a two-year period, if specified sales goals are met. If those sales goals are met during the next two calendar years (ending Dec. 31, 2005), Kodak will pay a maximum of $150 million in cash. There will also be additional sales-related earn-out payments over a five-year period, if certain sales targets are achieved. Kodak will not pay any cash at closing for the business being acquired.